Creating a Win-Win: Inside Coke’s New Startup Model

Coke is partnering with experienced entrepreneurs around the world to build high-growth startups through the Coca-Cola Founders platform.

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In 10 cities around the
world – from San Francisco to Sydney, Berlin to Buenos Aires – hand-picked teams
of entrepreneurs are building new startups with the support of Coke’s marketing
muscle, distribution network and other assets.

“We’re
trying to create a win-win,” David Butler, Coke’s global VP of innovation and entrepreneurship,
says about the new Coca-Cola Founders platform. “First we partner with experienced
entrepreneurs and invite them to join our global co-founder network. Next we
connect them with a senior-level advisor inside one of our business units and go
deep into the challenges and opportunities we’re facing at Coke. And finally,
we give them open access to Coca-Cola’s relationships, resources
and reach before they develop an idea
into a startup. Our goal
is to help our founders grow big new, high-growth businesses while helping us
grow Coca-Cola at the same time.”

Tackling ‘Shark-Bite’ Problems

Coke is partnering with the Co-Founder network to tackle what Butler calls "shark-bite problems."

“Some problems create a ‘mosquito-level’ of pain for
people,” he explains, “and others create much more pain—‘shark-bite’ kind of
pain. Those are the types of business challenges we’re going after. We believe
if we can solve big problems that a lot of people have, we can build them into
new, high-growth businesses.”

One of the first startups
to come out of the Coca-Cola Founders platform, Wonolo (shorthand for “Work Now Locally”), was
founded to simultaneously tackle a big Coca-Cola business challenge – reducing
out-of-stock product inventory – and the “shark-bite problem” of youth
unemployment. An app connecting “Wonoloers” with hourly or daily jobs in
merchandising, fulfillment, event staffing and more went live in December 2013 with
a handful of customers in San Francisco, Calif. and Albuquerque, N.M.

“Internally, we
sometimes refer to out-of-stocks as our next ‘billion-dollar brand’ because if
we can crack this problem, we could capture $1 billion in untapped revenue,”
Butler explains. “When Coke or any of our other products are not on the shelves,
shoppers can’t buy them. The Co-Founders recognized this, but then thought
beyond Coke by asking the question: ‘What if we could make it easier for
companies that have on-demand, daily or hourly jobs – such as restocking store
shelves – to connect with workers who want these kind of jobs?’”

Three years ago, Wonolo
co-founder A.J. Brustein was building business plans and creative campaigns for
one of one of the world’s most beloved brands: Coca-Cola. Today, he’s working with
his partner, Yong Kim, to build an entirely new company in an entirely new
industry from scratch.

“I love
marketing because I enjoy doing things that affect people,” says A.J. Brustein,
Wonolo co-founder. “When you create a new product or campaign, you see people
interacting with and responding to your work. Wonolo is that times 100 because
we’re not just building on top of a brand people have a strong affinity for.
We’re creating something entirely new, from the ground up, that will affect
people’s lives.”

Entrepreneurial Roots

Entrepreneurship is part of Coke’s DNA. In 1886, an Atlanta pharmacist
named Dr. John Pemberton invented Coca-Cola. Knowing he couldn’t build an entirely new industry alone,
he partnered with pharmacy owners to distribute his tasty elixir to thirsty
customers via soda fountains. Two years later, he sold his business to Asa
Candler, a serial entrepreneur who was approached shortly thereafter by two
Chattanooga, Tenn.-based businessmen who had a vision to build a network of independent
bottlers who could help bring Coca-Cola to the masses.

“They built their businesses
by helping us grow ours,” Butler says. “The Founders platform offers the same
value proposition… we’re continuing to empower entrepreneurs in a way that only
Coca-Cola can."

Over the last several
years, Coke has invested in emerging beverage brands such as ZICO, Honest Tea
and Innocent, as well as tech startups focused on Coke consumers’ core passion
points, like Spotify and Misfit Wearables. This new platform is one more way to
partner directly with entrepreneurs.

“Our goal is to
create new startups, rather than find existing startups to invest in.” Butler
says. “We invest in people first and ideas second. We give founders the time
and attention required to truly validate a problem, design the best solution, identify
the right market and find a business model to create a sustainable company.”

The Singapore Co-Founders at work.

Finding
the Right Fit

Every Coca-Cola Founder is selected for his or her ability to hit the
ground running: to bootstrap a business, test hypothesizes, design a product, build a team, and
develop a customer base.

“We are looking
for entrepreneurs who are
naturals at using the Lean Startup Method,” said Ross Kimbel, director of global
innovation. “The Lean Startup Method emphasizes minimum spend and maximum
speed. This enables our founders to solve problems quickly using the least
amount of resources. And once we find the
solution and create a sustainable business model around it, we scale it.”

Coke isn’t looking for first-time founders or people with dreams of
running a startup. Sometimes, it comes down to timing. Several founders joined
the network after a failure or significant exit, Kimbel notes.

“We partner with experienced entrepreneurs who’ve been there and done
that,” he adds. “They’ve built companies of their own, and they’re ready to
build something again with the kind of impact that can only be achieved by
partnering with Coke.”

Managing a large multinational is night and day
compared to building a startup. “At Coke, it’s all about effective business
planning,” Kimbel said. “Startups, meanwhile, start with nothing. For them,
it’s not about planning… it’s about learning quickly and adapting to the market
as fast as possible.”

Launch
First, Plan Later

For Coke, a company loaded with talented “scalers”, attracting
“starters” meant creating an entirely new operating model, recruiting processes and more. Since its
launch in 2013, the platform has undergone three major pivots—significant
shifts in how the platform works inside of Coke.

“We decided
to learn by doing,” Butler says. “We’re not sitting back and planning our way
forward. It’s very messy, but it’s all about learning as fast as possible."

At first, Coke recruited employees to become founders
on a part-time, stretch-assignment basis. “We tried to force-fit the program
into existing roles, but immediately realized that didn’t work,” Kimbel
explained. “We needed to partner with experienced founders who had built companies
on the outside. And they needed to be out in the field because that’s where the
true problems we’re hoping to solve are – not in Atlanta.”

The first team of founders was hired in February 2013
in Sydney, Australia, followed by Yong and Brustein in San Francisco about a
month later. As part of a global network, founders gain access to talent,
contacts and ideas.

“We’re building a community
of like-minded entrepreneurs. “It can be really lonely out there for founders,”
Kimbel says. “Our network provides support to help them win.”

Each team creates a new
legal entity – they own 100 percent of their startup from the get-go – then
work closely with a Coke senior manager in their local market, who serves as an
advisor and link to the company’s resources. This structure creates an “inside”
connection to Coca-Cola while maintaining the flexibility and speed required to
build a startup.

Once a team validates its business model and is ready to scale, Coke
converts its investment to a minority equity share based on market valuation. To date, the Coca-Cola Founders
platform has spawned 10 startups.

“At the end of the day, this is all about people,” says
Butler. “We want to solve big problems lots of people have by connecting
directly with entrepreneurs. We believe this can unleash enormous growth for
our business but also create more jobs, more diversity, and ultimately, more
happiness in the communities we touch around the world.”

The Coca-Cola Company (NYSE: KO) is the world’s largest beverage company, offering over 500 brands to people in more than 200 countries. Of our 21 billion-dollar brands, 19 are available in lower- or no-sugar options to help people moderate their consumption of added sugar. In addition to our namesake Coca-Cola drinks, some of our leading brands around the world include: AdeS soy-based beverages, Ayataka green tea, Dasani waters, Del Valle juices and nectars, Fanta, Georgia coffee, Gold Peak teas and coffees, Honest Tea, Minute Maid juices, Powerade sports drinks, Simply juices, smartwater, Sprite, vitaminwater, and Zico coconut water. At Coca-Cola, we’re serious about making positive contributions to the world. That starts with reducing sugar in our drinks and continuing to introduce new ones with added benefits. It also means continuously working to reduce our environmental impact, creating rewarding careers for our associates and bringing economic opportunity wherever we operate. Together with our bottling partners, we employ more than 700,000 people around the world.

The fairlife® brand is owned by fairlife, LLC, our joint venture with Select Milk Producers, Inc., and fairlife’s products are distributed by our Company and certain of our bottling partners.